REG - Burford Capital Ltd - 3Q23 Results & Quarterly Report
09/11/2023 12:00
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RNS Number : 9668S Burford Capital Limited 09 November 2023
November 9, 2023
BURFORD CAPITAL REPORTS NINE-MONTH AND THIRD QUARTER 2023 FINANCIAL RESULTS;
NINE-MONTH CONSOLIDATED TOTAL REVENUES INCREASED FIVEFOLD TO $794 MILLION
Burford Capital Limited ("Burford"), the leading global finance and asset
management firm focused on law, today announces its unaudited financial
results at and for the three and nine months ended September 30, 2023.(1)
Burford's report on Form 6-K at and for the three and nine months ended
September 30, 2023, including unaudited condensed consolidated financial
statements (the "3Q23 Quarterly Report"), is available at
http://www.rns-pdf.londonstockexchange.com/rns/9668S_1-2023-11-9.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/9668S_1-2023-11-9.pdf) and
on the Burford Capital website at http://investors.burfordcapital.com
(http://investors.burfordcapital.com) .
Christopher Bogart, Chief Executive Officer of Burford Capital, commented:
"Consolidated total revenues increased fivefold to $794 million in the first
nine months of 2023 compared to the prior-year period, driven by significant
growth in capital provision income with and without our YPF-related assets.
Positive realizations' momentum has continued, with Burford-only capital
provision-direct realizations up 42% in the first nine months of 2023 from the
prior-year period as portfolio activity has continued. Group-wide total
portfolio grew 16% in the first nine months of 2023 to $7.1 billion,
benefiting from significant fair value gains and growth in deployments and
undrawn commitments. In the first nine months of 2023, we have grown book
value 27% to $10.10 per ordinary share, the first time in our history we have
surpassed $10 per ordinary share."
Consolidated financial results
Summary statements of operations
Nine months ended September 30, Three months ended September 30,
Consolidated (US GAAP) 2023 2022 +/-% 2023 2022 +/-%
($ in thousands, except per share data)
Capital provision income 1,016,113 153,166 563% 504,513 (22,579) NM
Asset management income 5,767 7,091 -19% 1,876 1,583 19%
Total revenues 794,329 157,891 403% 368,873 (12,701) NM
Net income/(loss) attributable to Burford Capital Limited shareholders 510,427 (51,408) NM 272,542 (58,336) NM
Per diluted ordinary share 2.33 (0.23) NM 1.24 (0.27) NM
Note: "NM" denotes non meaningful.
Summary statements of financial position
Consolidated (US GAAP) September 30, 2023 December 31, 2022 $ change +/-%
($ in thousands, except per share data)
Capital provision assets 4,894,648 3,735,556 1,159,092 31%
Total Burford Capital Limited equity 2,208,235 1,742,584 465,651 27%
Book value per ordinary share 10.10 7.97 2.13 27%
Non-controlling interests 828,877 644,486 184,391 29%
Total shareholders' equity 3,037,112 2,387,070 650,042 27%
Total liabilities and shareholders' equity 5,526,335 4,288,359 1,237,976 29%
(1) In this announcement, references to (1) "3Q23" and "3Q22" are to Burford's
unaudited financial results for the three months ended September 30, 2023 and
2022, respectively, and (2) "9M23"and "9M22" are to Burford's unaudited
financial results for the nine months ended September 30, 2023 and 2022,
respectively.
All figures in this announcement are unaudited and presented on a consolidated
basis in accordance with the generally accepted accounting principles in the
United States ("US GAAP"), unless otherwise stated. Definitions,
reconciliations and information additional to those set forth in this
announcement are available on the Burford Capital website and in the 3Q23
Quarterly Report (as defined above). In addition, Burford applied its revised
valuation methodology for capital provision assets to its unaudited condensed
consolidated financial statements at September 30, 2023 and for the three and
nine months ended September 30, 2023 and 2022 included in this announcement.
However, because Burford has not previously issued quarterly financial
statements, the unaudited condensed consolidated financial statements for the
three and nine months ended September 30, 2022 contained in this announcement
have not historically been presented and therefore are not a restatement of
previously issued unaudited condensed consolidated financial statements.
Burford-only operational and financial review (non-GAAP)
Selected metrics(1)
Nine months ended September 30, Three months ended September 30,
Burford-only (non-GAAP) 2023 2022 +/-% 2023 2022 +/-%
($ in thousands)
Realized gains relative to cost 123,539 62,870 96% 29,145 36,269 -20%
Realizations 274,101 192,480 42% 79,158 122,278 -35%
Cash receipts(2) 379,732 229,472 65% 132,794 130,018 2%
Deployments 304,432 275,419 11% 55,986 153,289 -63%
New commitments 448,682 400,568 12% 17,648 105,342 -83%
(1) Represents Burford-only capital provision-direct, unless noted otherwise.
(2) Represents Burford-only proceeds from capital provision-direct, capital
provision-indirect and asset management and other services.
( )
Group-wide (non-GAAP) September 30, 2023 December 31, 2022 $ change +/-%
($ in thousands)
Total portfolio 7,103,559 6,146,871 956,688 16%
§ Realized gains of $124 million in 9M23 nearly doubled from the prior-year
period (9M22: $63 million), with no contribution from YPF-related assets
o Realized gains in 9M23 included a $37 million gain from the resolution of an
asset recovery matter
§ Realizations in 9M23 up 42% to $274 million (9M22: $192 million)
o Continued strength in realizations in 9M23 reflects increased portfolio
velocity, as the case backlog in the courts continues to clear
§ Cash receipts in 9M23 up 65% to $380 million (9M22: $229 million)
o Cash receipts in 9M23 meaningfully exceeded total operating expenses and
finance costs
§ Deployments in 9M23 up 11% to $304 million (9M22: $275 million)
o 50% of total Burford-only capital provision-direct deployments in 9M23 related
to the 2023 vintage year
§ New commitments in 9M23 up 12% to $449 million (9M22: $401 million)
§ Group-wide total portfolio increased 16% to $7.1 billion at September 30, 2023
(December 31, 2022: $6.1 billion), due to significant fair value gains and
growth in deployments and undrawn commitments
Selected financial metrics
Nine months ended September 30, Three months ended September 30,
Burford-only (non-GAAP) 2023 2022 +/-% 2023 2022 +/-%
($ in thousands, except per share data)
Total revenues 725,927 107,432 576% 344,013 (14,223) NM
Operating income/(loss) 575,550 26,487 NM 291,212 (39,339) NM
Net income/(loss) 510,427 (51,408) NM 272,542 (58,336) NM
Burford-only (non-GAAP) September 30, 2023 December 31, 2022 $ change +/-%
($ in thousands, except per share data)
Tangible book value attributable to Burford Capital Limited 2,074,311 1,608,672 456,639 29%
Tangible book value attributable to Burford Capital Limited per ordinary share 9.48 7.36 2.12 29%
§ Total revenues in 9M23 of $726 million (9M22: $107 million), a driver of
significant earnings improvement
o Growth in realized and unrealized gains, excluding YPF-related assets, from
increased case resolutions and milestone developments
o Realized gains on total capital provision assets of $125 million in 9M23
nearly doubled compared to 9M22, with no contribution from YPF-related assets
o Unrealized gains, excluding YPF-related assets, on total capital provision
assets increased 78% in 9M23 compared to 9M22, showing portfolio activity
o Favorable summary judgment in 1Q23 and favorable final judgment in 3Q23 in
YPF-related assets generated $460 million in unrealized gains in 9M23
§ Operating income in 9M23 of $576 million (9M22: $26 million), reflecting
growth in total revenues
o Operating expenses in 9M23 of $150 million (9M22: $81 million) reflect strong
portfolio performance and certain idiosyncratic events-increase driven
primarily by non-cash increase in long-term incentive compensation including
accruals from unrealized gains on YPF-related assets and legacy asset recovery
incentive compensation including accruals
- Long-term incentive compensation is only paid once cash recoveries are
received
- Only one eligible asset recovery asset remains
o Salaries and benefits and general, administrative and other expenses only
slightly higher after certain noted items in 9M23 compared to 9M22
o Legacy asset recovery incentive compensation including accruals and
case-related expenditures ineligible for inclusion in asset cost continue to
be idiosyncratic
§ Net income in 9M23 of $510 million (9M22: Net loss of $51 million)
o Net income per diluted share in 9M23 of $2.33 (9M22: Net loss of $0.23 per
diluted share)
§ Tangible book value attributable to Burford Capital Limited of $2,074 million
at September 30, 2023 (December 31, 2022: $1,609 million)
o Tangible book value attributable to Burford Capital Limited per ordinary share
increased 29% (38% annualized) to $9.48 at September 30, 2023 (December 31,
2022: $7.36), primarily reflecting strong earnings
§ Annualized Burford-only ROTE for 9M23 of 37%
Selected portfolio metrics
Burford-only September 30, 2023 December 31, 2022 $ change +/-%
($ in thousands)
Deployed cost 1,644,661 1,486,150 158,511 11%
Plus: Fair value adjustments 1,661,153 1,117,855 543,298 49%
Fair value 3,305,814 2,604,005 701,809 27%
Undrawn commitments 1,372,555 1,299,048 73,507 6%
Total capital provision-direct portfolio 4,678,369 3,903,053 775,316 20%
Total capital provision portfolio(1) 4,721,926(2) 3,942,700(3) 779,226 20%
(1) Represents capital provision-direct and capital provision-indirect.
(2) The fair value of Burford-only capital provision-indirect assets does not
include $0.4 million of our interests in the Strategic Value Fund. All assets
held at the Strategic Value Fund have concluded at September 30, 2023.
(3) The fair value of $31.4 million for the Burford-only capital
provision-indirect assets did not include an additional $1.0 million for the
Burford-only portion of the receivable from due from settlement of capital
provision assets on concluded assets in the Strategic Value Fund for a total
fair value of $32.4 million for Burford-only capital provision-indirect
assets.
( )
§ Fair value of Burford-only capital provision-direct assets increased $702
million to $3.3 billion at September 30, 2023 (December 31, 2022: $2.6
billion)
§ Of the $702 million increase in capital provision-direct asset fair value in
9M23, $463 million attributable to the YPF-related assets
§ Cumulative ROIC since inception from Burford-only capital provision-direct
assets of 87% (December 31, 2022: 88%) and IRR of 27% (December 31, 2022: 29%)
Liquidity and capital
Burford-only (non-GAAP) September 30, 2023 December 31, 2022 $ change +/-%
($ in thousands)
Liquidity
Cash and cash equivalents 240,028 73,679 166,349 226%
Marketable securities 107,006 136,358 (29,352) -22%
Total liquidity 347,034 210,037 136,997 65%
Due from settlement of capital provision assets 69,530 114,650 45,120 -39%
§ Burford-only cash and cash equivalents and marketable securities of $347
million at September 30, 2023 (December 31, 2022: $210 million)
o Strong liquidity position at September 30, 2023 primarily reflects continued
solid Burford-only cash receipts and issuance of $400 million in senior notes
in June 2023, partially offset by the redemption in full of the 6.125% bonds
due 2024 in July 2023
o Liquidity levels enable us to take advantage of new opportunities, while
recognizing the variability of cash inflows
§ Burford-only due from settlement of capital provision assets of $70 million at
September 30, 2023 (December 31, 2022: $115 million)
§ Total debt outstanding of $1.6 billion at September 30, 2023 (December 31,
2022: $1.3 billion)
o Leverage decreased in 9M23, primarily driven by asset and equity growth and
remains well below covenant ceiling levels
o In June 2023, Moody's revised its outlook on its Ba2 rating to positive from
stable
o In October 2023, S&P revised its outlook on its BB- rating to positive
from stable
Investor and Analyst Conference Call
Burford will hold a conference call for investors and analysts at 10.00am EST
/ 3.00pm GMT on Thursday, November 9, 2023. The dial-in number for the
conference call is +1 646 664-1960 (USA) / +44 (0)20 4587 0498 (UK) / +44
(0)20 3936 2999 (all other locations) and the access code is 151405. To
minimize the risk of delayed access, participants are urged to dial into the
conference call by 9.40am EST / 2.40pm GMT.
A live webcast of the call will also be available at
https://www.investis-live.com/burfordcapital/65044c3f673c270c008a5d08/3q23-results
(https://www.investis-live.com/burfordcapital/65044c3f673c270c008a5d08/3q23-results)
, and pre-registration at that link is encouraged.
An accompanying 3Q23 and 9M23 results presentation for investors and analysts
will also be made available on the Burford Capital website prior to the
conference call at http://investors.burfordcapital.com
(http://investors.burfordcapital.com) .
Following the conference call, a replay facility for this event will be
available until Thursday, November 23, 2023 by dialing +1 845 709-8569 (USA) /
+44 (0)20 3936 3001 (UK) / +44 (0)20 3936 3001 (all other locations) and using
the replay access code 241638. A replay facility will also be accessible
through the webcast at
https://www.investis-live.com/burfordcapital/65044c3f673c270c008a5d08/3q23-results
(https://www.investis-live.com/burfordcapital/65044c3f673c270c008a5d08/3q23-results)
.
For further information, please contact:
Burford Capital Limited
For investor and analyst inquiries:
Robert Bailhache, Head of Investor Relations, EMEA and Asia - email +44 (0)20 3530 2023
(mailto:rbailhache@burfordcapital.com)
Jim Ballan, Head of Investor Relations, Americas - email +1 (646) 793 9176
(mailto:JBallan@burfordcapital.com)
For press inquiries:
David Helfenbein, Vice President, Public Relations - email +1 (212) 235 6824
(mailto:dhelfenbein@burfordcapital.com)
Deutsche Numis - NOMAD and Joint Broker +44 (0)20 7260 1000
Giles Rolls
Charlie Farquhar
Jefferies International Limited - Joint Broker +44 (0)20 7029 8000
Graham Davidson
James Umbers
Berenberg - Joint Broker +44 (0)20 3207 7800
Toby Flaux
James Thompson
Yasmina Benchekroun
About Burford Capital
Burford Capital is the leading global finance and asset management firm
focused on law. Its businesses include litigation finance
(https://www.burfordcapital.com/) and risk management, asset recovery and a
wide range of legal finance and advisory activities. Burford is publicly
traded on the New York Stock Exchange (NYSE: BUR) and the London Stock
Exchange (LSE: BUR), and it works with companies and law firms around the
world from its offices in New York, London, Chicago, Washington, DC,
Singapore, Dubai, Sydney and Hong Kong.
For more information, please visit www.burfordcapital.com
(http://www.burfordcapital.com) .
Summary Financial Statements and Reconciliations
The tables below set forth summaries of the condensed consolidated and
Burford-only statements of operations for the three and nine months ended
September 30, 2023 and 2022, the condensed consolidated and Burford-only
statements of financial position at September 30, 2023 and December 31, 2022
and corresponding reconciliations from consolidated to Burford-only financial
results. Furthermore, the tables below set forth certain additional
reconciliations for financial information contained in this announcement.
Summary condensed consolidated statements of operations
Three months ended September 30, Nine months ended September 30,
($ in thousands) 2023 2022 2023 2022
Revenues
Capital provision income/(loss) 504,513 (22,579) 1,016,113 153,166
(Less)/Plus: Third-party interests in capital (140,412) 11,910 (235,944) 12,128
provision assets
Asset management income 1,876 1,583 5,767 7,091
Services and other income/(loss) 2,896 (3,615) 8,393 (14,494)
Total revenues 368,873 (12,701) 794,329 157,891
Total operating expenses 53,068 25,319 150,999 82,146
Operating income/(loss) 315,805 (38,020) 643,330 75,745
Finance costs and loss on debt extinguishment 29,013 20,335 70,690 57,812
Foreign currency transactions (gains)/losses (9,811) 6,328 (21,149) 9,386
Income/(loss) before income taxes 296,603 (64,683) 593,789 8,547
Benefit from/(provision for) income taxes 531 7,562 (15,550) (10,804)
Net income/(loss) 297,134 (57,121) 578,239 (2,257)
Net income/(loss) attributable to Burford Capital Limited shareholders 272,542 (58,336) 510,427 (51,408)
Net income/(loss) attributable to Burford Capital Limited shareholders per
ordinary share
Basic $1.24 $(0.27) $2.33 $(0.23)
Diluted $1.22 $(0.27) $2.29 $(0.23)
Summary Burford-only statement of operations
Three months ended September 30, Nine months ended September 30,
($ in thousands) 2023 2022 2023 2022
Revenues
Capital provision income 324,995 (15,335) 676,402 80,442
Asset management income 16,141 4,559 41,182 41,322
Services and other income 2,877 (3,447) 8,343 (14,332)
Total revenues 344,013 (14,223) 725,927 107,432
Operating income 291,212 (39,339) 575,550 26,487
Net income 272,542 (58,336) 510,427 (51,408)
Net income per share:
Basic $1.24 $(0.27) $2.33 $(0.23)
Diluted $1.22 $(0.27) $2.29 $(0.23)
Reconciliation of summary condensed consolidated statement of operations to
summary Burford-only statement of operations
Three months ended September 30, 2023
(GAAP) (Non-GAAP)
Elimination of third-party interests
($ in thousands) Consolidated Strategic Value Fund BOF-C Colorado Advantage Fund Other Burford-only
Capital provision income 504,513 (845) (36,193) (140,690) (8,368) 6,578 324,995
(Less): Third-party interests in capital provision assets (140,412) - - 140,699 - (287) -
Asset management income 1,876 16 14,249 - - - 16,141
Services and other income/(loss) 2,896 (1) (3) - - (15) 2,877
Total revenues 368,873 (830) (21,947) 9 (8,368) 6,276 344,013
Operating income 315,804 (193) (22,020) - (8,292) 5,912 291,212
Net income/(loss) 297,133 (193) (22,020) - (8,292) 5,913 272,542
Three months ended September 30, 2022
(GAAP) (Non-GAAP)
Elimination of third-party interests
($ in thousands) Consolidated Strategic Value Fund BOF-C Colorado Advantage Fund Other Burford-only
Capital provision income (22,579) 6,138 (11,090) 12,070 95 31 (15,335)
Plus: Third-party interests in capital provision assets 11,910 - - (12,060) - 150 -
Asset management income 1,583 48 2,928 - - - 4,559
Services and other (loss)/income (3,615) 183 - - - (15) (3,447)
Total revenues (12,701) 6,369 (8,162) 10 95 166 (14,223)
Operating income (38,020) 6,479 (8,209) - 207 204 (39,339)
Net income/(loss) (57,121) 6,479 (8,208) - 207 307 (58,336)
Nine months ended September 30, 2023
(GAAP) (Non-GAAP)
Elimination of third-party interests
($ in thousands) Consolidated Strategic Value Fund BOF-C Colorado Advantage Fund Other Burford-only
Capital provision income 1,016,113 (1,052) (84,429) (235,731) (20,373) 1,874 676,402
(Less): Third-party interests in capital provision assets (235,944) - - 235,710 - 234 -
Asset management income 5,767 108 35,307 - - - 41,182
Services and other income 8,393 (1) (5) - - (44) 8,343
Total revenues 794,329 (945) (49,127) (21) (20,373) 2,064 725,927
Operating income 643,329 (12) (49,417) - (20,094) 1,743 575,550
Net income/(loss) 578,238 (12) (49,417) - (20,094) 1,711 510,427
Nine months ended September 30, 2022
(GAAP) (Non-GAAP)
Elimination of third-party interests
($ in thousands) Consolidated Strategic Value Fund BOF-C Colorado Advantage Fund Other Burford-only
Capital provision income 153,166 3,861 (85,265) 12,568 (223) (3,665) 80,442
Plus: Third-party interests in capital provision assets 12,128 - - (12,570) - 442 -
Asset management income 7,091 266 33,965 - - - 41,322
Services and other income (14,494) 183 - - - (21) (14,332)
Total revenues 157,891 4,310 (51,300) (2) (223) (3,244) 107,432
Operating income 75,745 5,122 (51,409) - 130 (3,101) 26,487
Net income/(loss) (2,257) 5,122 (51,408) - 130 (2,995) (51,408)
Reconciliation of capital provision income excluding YPF-related assets
($ in thousands) Three months ended Nine months ended
September 30, 2023 September 30, 2023
Capital provision income 504,513 1,016,113
Less: Capital provision income from YPF-related assets (417,920) (695,238)
Capital provision income excluding YPF-related assets 86,593 320,875
Summary condensed consolidated statement of financial position
At
($ in thousands) September 30, 2023 December 31, 2022
Total assets 5,526,335 4,288,359
Total liabilities 2,489,223 1,901,289
Total Burford Capital Limited equity 2,208,235 1,742,584
Non-controlling interests 828,877 644,486
Total shareholders' equity 3,037,112 2,387,070
Basic ordinary shares outstanding 218,698,930 218,581,877
Total shareholders' equity attributable to Burford Capital Limited per basic $10.10 $7.97
ordinary share
Total shareholders' equity per basic ordinary share $13.89 $10.92
Reconciliation of summary condensed consolidated statement of financial
position to summary Burford-only statement of financial position
At September 30, 2023
(GAAP) (Non-GAAP)
Elimination of third-party interests
($ in thousands) Consolidated Strategic Value Fund BOF-C Colorado Advantage Fund Other Burford-only
Total assets 5,526,335 (260) (581,980) (644,955) (189,490) (73,984) 4,035,666
Total liabilities 2,489,223 (199) - (644,955) (60) (16,578) 1,827,431
Total shareholders' equity 3,037,112 (61) (581,980) - (189,430) (57,406) 2,208,235
At December 31, 2022
(GAAP) (Non-GAAP)
Elimination of third-party interests
($ in thousands) Consolidated Strategic Value Fund BOF-C Colorado Advantage Fund Other Burford-only
Total assets 4,288,359 (2,779) (477,590) (409,249) (103,523) (76,792) 3,218,426
Total liabilities 1,901,289 (228) (4,234) (409,249) (120) (11,616) 1,475,842
Total shareholders' equity 2,387,070 (2,551) (473,356) - (103,403) (65,176) 1,742,584
Reconciliation of components of realizations from a consolidated basis to a
Group-wide basis
Three months ended September 30, 2023
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 89,162 (10,004) 79,158 16,539 12,243 107,940
Capital provision-indirect 19,575 (6,228) 13,347 6,228 - 19,575
Post-settlement - - - 20,050 - 20,050
Total realizations 108,737 (16,232) 92,505 42,817 12,243 147,565
Three months ended September 30, 2022
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 160,224 (37,946) 122,278 78,455 37,224 237,957
Capital provision-indirect 8,345 (4,758) 3,587 7,847 - 11,434
Post-settlement - - - 12,146 - 12,146
Total realizations 168,569 (42,704) 125,865 98,448 37,224 261,537
Nine months ended September 30, 2023
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 335,414 (61,313) 274,101 89,915 64,994 429,010
Capital provision-indirect 59,219 (39,317) 19,902 39,002 - 58,904
Post-settlement - - - 118,307 - 118,307
Total realizations 394,633 (100,630) 294,003 247,224 64,994 606,221
Nine months ended September 30, 2022
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 236,204 (43,724) 192,480 102,836 49,543 344,859
Capital provision-indirect 20,811 (11,125) 9,686 25,749 - 35,435
Post-settlement - - - 50,449 - 50,449
Total realizations 257,015 (54,849) 202,166 179,034 49,543 430,743
Reconciliation of components of deployments from a consolidated basis to a
Group-wide basis
Three months ended September 30, 2023
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 69,690 (13,704) 55,986 4,379 21,819 82,184
Capital provision-indirect 32,257 (26,881) 5,376 26,881 - 32,257
Post-settlement - - - 7,466 - 7,466
Total deployments 101,947 (40,585) 61,362 38,726 21,819 121,907
Three months ended September 30, 2022
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 197,916 (44,627) 153,289 6,277 45,155 204,721
Capital provision-indirect 9,653 (7,923) 1,730 8,422 - 10,152
Post-settlement - - - 7,419 - 7,419
Total deployments 207,569 (52,550) 155,019 22,118 45,155 222,292
Nine months ended September 30, 2023
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 401,215 (96,783) 304,432 17,362 97,775 419,569
Capital provision-indirect 145,051 (120,876) 24,175 120,876 - 145,051
Post-settlement - - - 43,272 - 43,272
Total deployments 546,266 (217,659) 328,607 181,510 97,775 607,892
Nine months ended September 30, 2022
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 381,482 (106,063) 275,419 20,944 105,459 401,822
Capital provision-indirect 29,829 (24,699) 5,130 25,198 - 30,328
Post-settlement - - - 50,571 - 50,571
Total deployments 411,311 (130,762) 280,549 96,713 105,459 482,721
Reconciliation of consolidated proceeds from capital provision assets to
Burford-only cash receipts
($ in thousands) Nine months ended September 30, 2023 Nine months ended September 30, 2022
Consolidated proceeds from capital provision assets 440,154 282,322
Less: Elimination of third-party interests (94,587) (70,137)
Burford-only total proceeds from capital provision assets 345,567 212,185
Burford-only proceeds from capital provision-direct assets 319,236 202,499
Burford-only proceeds from capital provision-indirect assets 26,331 9,686
Burford-only total proceeds from capital provision assets 345,567 212,185
Consolidated asset management income 5,767 7,091
Plus: Eliminated income from funds 35,415 34,231
Burford-only asset management income 41,182 41,322
Less: Non-cash adjustments((1)) (12,137) (29,527)
Burford-only proceeds from asset management income 29,045 11,795
Burford-only proceeds from marketable security interest and dividends 3,625 1,845
Burford-only proceeds from asset recovery fee for services (38) 629
Burford-only proceeds from insurance receipts 1,533 3,018
Burford-only proceeds from asset management and other services 34,165 17,287
Cash receipts 379,732 229,472
(1) Adjustments for the change in asset management receivables accrued during
the applicable period but not yet received at the end of such period.
Reconciliation of consolidated portfolio to Group-wide portfolio
($ in thousands) At September 30, 2023 At December 31, 2022
Consolidated fair value 4,894,648 3,735,556
Consolidated undrawn commitments 1,811,824 1,720,727
Eliminations of third-party interests:
Less: Attributable to fair value (1,550,901) (1,100,137)
Less: Attributable to undrawn commitments (433,645) (413,446)
Burford-only fair value 3,343,747 2,635,419
Burford-only undrawn commitments 1,378,179 1,307,281
Burford-only portfolio 4,721,926 3,942,700
Other funds fair value 1,135,257 1,076,320
Other funds undrawn commitments 203,004 239,145
Other funds portfolio 1,338,261 1,315,465
BOF-C fair value 638,432 516,982
BOF-C undrawn commitments 404,940 371,724
BOF-C portfolio 1,043,372 888,706
Total group-wide portfolio 7,103,559 6,146,871
Reconciliation of consolidated to Burford-only cash and cash equivalents and
marketable securities
At September 30, 2023 At December 31, 2022
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
($ in thousands) Consolidated Elimination of third-party interests Burford-only Consolidated Elimination of third-party interests Burford-only
Cash and cash equivalents 255,568 (15,540) 240,028 107,658 (33,979) 73,679
Marketable securities 107,006 - 107,006 136,358 - 136,358
Total cash and cash equivalents and marketable securities 362,574 (15,540) 347,034 244,016 (33,979) 210,037
Reconciliation of consolidated to Burford-only capital provision assets
At September 30, 2023 At December 31, 2022
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
($ in thousands) Consolidated Elimination of third-party interests Burford-only Consolidated Elimination of third-party interests Burford-only
YPF-related assets 1,931,013 (645,245) 1,285,768 1,232,549 (409,514) 823,035
Other assets 2,963,635 (905,225) 2,058,410 2,503,007 (689,602) 1,813,405
Capital provision assets 4,894,648 (1,550,470) 3,344,178 3,735,556 (1,099,116) 2,636,440
Reconciliation of consolidated to Burford-only due from settlement of capital
provision assets
At September 30, 2023 At December 31, 2022
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
($ in thousands) Consolidated Elimination of third-party interests Burford-only Consolidated Elimination of third-party interests Burford-only
Due from settlement of capital provision assets 71,284 (1,754) 69,530 116,582 (1,932) 114,650
Reconciliation of consolidated to Burford-only realized gains on capital
provision-direct assets
Three months ended September 30, 2023 Three months ended September 30, 2022
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Consolidated Eliminations and adjustments Burford-only
Realized gains relative to cost 37,566 (7,440) 30,126 51,769 (15,288) 36,481
Nine months ended September 30, 2023 Nine months ended September 30, 2022
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Consolidated Eliminations and adjustments Burford-only
Realized gains relative to cost 171,331 (46,811) 124,520 85,809 (21,853) 63,956
Reconciliation of shareholders' equity attributable to Burford Capital Limited
per ordinary share
($ in thousands, except share data) At September 30, 2023 At December 31, 2022
Total shareholders' equity 3,037,112 2,387,070
Less: Non-controlling interests (828,877) (644,486)
Total Burford Capital Limited equity 2,208,235 1,742,584
Basic ordinary shares outstanding 218,698,930 218,581,877
Shareholders' equity attributable to Burford Capital Limited per ordinary $10.10 $7.97
share
Reconciliation of tangible book value attributable to Burford Capital Limited
per ordinary share
($ in thousands, except share data) At September 30, 2023 At December 31, 2022
Total Burford Capital Limited equity 2,208,235 1,742,584
Less: Goodwill (133,924) (133,912)
Tangible book value attributable to Burford Capital Limited 2,074,311 1,608,672
Basic ordinary shares outstanding 218,698,930 218,581,877
Tangible book value attributable to Burford Capital Limited per ordinary share $9.48 $7.36
Definitions and Use of Non-GAAP Financial Measures and Alternative Performance
Measures
Burford reports its financial results in accordance with US GAAP. US GAAP
requires us to present financial statements that consolidate some of the
limited partner interests in private funds we manage as well as assets held on
our balance sheet where we have a partner or minority investor. We therefore
refer to various presentations of our financial results as follows:
• Consolidated refers to assets, liabilities and activities that include those
third-party interests, partially owned subsidiaries and special purpose
vehicles that we are required to consolidate under US GAAP. At the date of
this announcement, the major entities where there is also a third-party
partner in, or owner of, those entities include BCIM Strategic Value Master
Fund, LP, Burford Opportunity Fund C LP, Burford Advantage Master Fund LP,
Colorado Investments Limited ("Colorado") and several other entities in which
Burford holds investments where there is also a third-party partner in, or
owner of, those entities.
• Burford-only refers to assets, liabilities and activities that pertain only to
Burford on a proprietary basis, excluding any third-party interests and the
portions of jointly owned entities owned by others.
• Group-wide refers to the totality of assets managed by Burford, including
those portions of the private funds owned by third parties and including
private funds that are not consolidated within Burford's consolidated
financial statements. Group-wide is therefore the sum of Burford-only and
non-controlling interests in consolidated and non-consolidated private funds.
Group-wide does not include third-party interests in capital provision assets,
the economics of which have been sold to those third parties, that do not meet
the criteria to be recognized as a sale under US GAAP. This includes the
third-party interests in Colorado and other capital provision asset
subparticipations.
We subdivide our capital provision assets into two categories:
• Direct, which includes all of our capital provision assets that we have
originated directly (i.e., not through participation in a private fund) from
our balance sheet. We also include direct (i.e., not through participation in
a private fund) complex strategies assets in this category.
• Indirect, which includes our balance sheet's participations in two of our
private funds (i.e., BCIM Strategic Value Master Fund, LP and Burford
Advantage Master Fund LP).
We also use certain unaudited alternative performance measures, including:
• Internal rate of return ("IRR") is a discount rate that makes the net present
value of a series of cash flows equal to zero and is expressed as a percentage
figure. We compute IRR on concluded (including partially concluded) legal
finance assets by treating that entire portfolio (or, when noted, a subset
thereof) as one undifferentiated pool of capital and measuring actual and, if
necessary, estimated inflows and outflows from that pool, allocating costs
appropriately. IRRs do not include unrealized gains or losses.
• Return on invested capital ("ROIC") from a concluded asset is the absolute
amount of realizations from such asset in excess of the amount of expenditure
incurred in funding such asset divided by the amount of expenditure incurred,
expressed as a percentage figure. ROIC is a measure of our ability to generate
absolute returns on our assets. Some industry participants express returns on
a multiple of invested capital ("MOIC") instead of a ROIC basis. MOIC includes
the return of capital and, therefore, is 1x higher than ROIC. In other words,
70% ROIC is the same as 1.70x MOIC.
Other unaudited alternative performance measures and terms we use include:
• Commitment is the amount of financing we agree to provide for a legal finance
asset. Commitments can be definitive (requiring us to provide funding on a
schedule or, more often, when certain expenses are incurred) or discretionary
(allowing us to provide funding after reviewing and approving a future
matter). Unless otherwise indicated, commitments include deployed cost and
undrawn commitments.
• Deployment refers to the funding provided for an asset, which adds to our
deployed cost in such asset.
• Deployed cost is the amount of funding we have provided for an asset at the
applicable point in time.
• Fair value adjustment is the amount of unrealized gain or loss recognized in
our consolidated statements of operations in the relevant period and added to
or subtracted from, as applicable, the asset or liability value in our
consolidated statements of financial position.
• Portfolio includes deployed cost, net unrealized gains or losses and undrawn
commitments.
• Realization: A legal finance asset is realized when the asset is concluded
(i.e., when litigation risk has been resolved). A realization will result in
us receiving cash or, occasionally, non-cash assets or recognizing a due from
settlement receivable, reflecting what we are owed on the asset.
• Realized gain / loss reflects the total amount of gain or loss generated by a
legal finance asset when it is realized, calculated as realized proceeds less
deployed cost, without regard for any previously recognized fair value
adjustment.
• Unrealized gain / loss represents the fair value of our legal finance assets
over or under their funded cost, as determined in accordance with the
requirements of the applicable US GAAP standards, for the relevant financial
reporting period (consolidated statement of operations) or cumulatively
(consolidated statement of financial position).
• YPF-related assets refers to our Petersen and Eton Park legal finance assets,
which are two claims relating to Republic of Argentina's nationalization of
YPF S.A., the Argentine energy company.
We also use certain non-GAAP financial measures, including:
• Book value per ordinary share is calculated by dividing total Burford Capital
Limited equity by the number of ordinary shares issued and outstanding.
• Cash receipts provide a measure of the cash that our capital provision and
other assets generate during a given period as well as cash from certain other
fees and income. In particular, cash receipts represent the cash generated
from capital provision and other assets, including cash proceeds from realized
or concluded assets and any related hedging assets, and cash received from
asset management income, services and/or other income, before any deployments
into funding existing or new assets. Cash receipts are a non-GAAP financial
measure and should not be considered in isolation from, as a substitute for,
or superior to, financial measures calculated in accordance with US GAAP. The
most directly comparable measure calculated in accordance with US GAAP is
proceeds from capital provision assets as set forth in our consolidated
statements of cash flows. We believe that cash receipts are an important
measure of our operating and financial performance and are useful to
management and investors when assessing the performance of our Burford-only
capital provision assets.
• Return on tangible equity ("ROTE") is Burford-only net income/(loss) divided
by the average of tangible equity at the beginning and end of the relevant
period, with tangible equity calculated as total Burford Capital Limited
equity less goodwill. ROTE is a non-GAAP financial measure and should not be
considered in isolation from, as a substitute for, or superior to, financial
measures calculated in accordance with US GAAP. The most directly comparable
measure calculated in accordance with US GAAP is net income/(loss)
attributable to Burford Capital Limited shareholders as set forth in our
consolidated statements of operations. We believe ROTE is an important measure
of our operating and financial performance and is useful to management and
investors when assessing the performance of our Burford-only capital provision
assets.
• Tangible book value attributable to Burford Capital Limited is calculated by
subtracting intangible assets (such as goodwill) from total Burford Capital
Limited equity. Tangible book value attributable to Burford Capital Limited
per ordinary share is calculated by dividing tangible book value attributable
to Burford Capital Limited by the total number of outstanding ordinary shares.
Each of tangible book value attributable to Burford Capital Limited and
tangible book value attributable to Burford Capital Limited per ordinary share
is a non-GAAP financial measure and should not be considered in isolation
from, as a substitute for, or superior to, financial measures calculated in
accordance with US GAAP. The most directly comparable measure calculated in
accordance with US GAAP is total Burford Capital Limited equity as set forth
in our consolidated statements of financial position. We believe that tangible
book value attributable to Burford Capital Limited per ordinary share is an
important measure of our financial condition and is useful to management and
investors when assessing capital adequacy and our ability to generate earnings
on tangible equity invested by our shareholders.
For additional information, including reconciliations of our non-GAAP
financial measures to the most directly comparable US GAAP measures and
reconciliations of our alternative performance measures additional to those
set forth in this announcement, see the 3Q23 Quarterly Report furnished to the
US Securities and Exchange Commission on November 9, 2023 and made available
on our website at http://investors.burfordcapital.com
(http://investors.burfordcapital.com) . Non-GAAP financial measures should not
be considered in isolation from, as substitutes for, or superior to, financial
measures calculated in accordance with US GAAP.
This announcement does not constitute an offer to sell or the solicitation of
an offer to buy any ordinary shares or other securities of Burford.
This announcement does not constitute an offer of any Burford private fund.
Burford Capital Investment Management LLC, which acts as the fund manager of
all Burford private funds, is registered as an investment adviser with the
US Securities and Exchange Commission. The information provided in this
announcement is for informational purposes only. Past performance is not
indicative of future results. The information contained in this announcement
is not, and should not be construed as, an offer to sell or the solicitation
of an offer to buy any securities (including, without limitation, interests or
shares in any of Burford private funds). Any such offer or solicitation may be
made only by means of a final confidential private placement memorandum and
other offering documents.
Forward-looking statements
This announcement contains "forward-looking statements" within the meaning of
Section 21E of the US Securities Exchange Act of 1934, as amended, regarding
assumptions, expectations, projections, intentions and beliefs about future
events. These statements are intended as "forward-looking statements". In some
cases, predictive, future-tense or forward-looking words such as "aim",
"anticipate", "believe", "continue", "could", "estimate", "expect",
"forecast", "guidance", "intend", "may", "plan", "potential", "predict",
"projected", "should" or "will" or the negative of such terms or other
comparable terminology are intended to identify forward-looking statements,
but are not the exclusive means of identifying such statements. In addition,
Burford and its representatives may from time to time make other oral or
written statements that are forward-looking, including in its periodic reports
that Burford files with, or furnishes to, the US Securities and Exchange
Commission, other information made available to Burford's security holders and
other written materials. By their nature, forward-looking statements involve
known and unknown risks, uncertainties and other factors because they relate
to events and depend on circumstances that may or may not occur in the future.
Burford cautions that forward-looking statements are not guarantees of future
performance and are based on numerous assumptions, expectations, projections,
intentions and beliefs and that Burford's actual results of operations,
including its financial position and liquidity, and the development of the
industry in which it operates, may differ materially from (and be more
negative than) those made in, or suggested by, the forward-looking statements
contained in this announcement. Significant factors that may cause actual
results to differ from those Burford expects include, among others, those
discussed under "Risk Factors" in Burford's annual report on Form 20-F for the
year ended December 31, 2022 filed with the US Securities and Exchange
Commission on May 16, 2023 and other reports or documents that Burford files
with, or furnishes to, the US Securities and Exchange Commission from time to
time. In addition, even if Burford's results of operations, including its
financial position and liquidity, and the development of the industry in which
it operates are consistent with the forward-looking statements contained in
this announcement, those results of operations or developments may not be
indicative of results of operations or developments in subsequent periods.
Except as required by law, Burford undertakes no obligation to update or
revise the forward-looking statements contained in this announcement, whether
as a result of new information, future events or otherwise.
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